Should Everyone Have a Prenup?

When you hear the word “prenup,” what comes to mind? If you’re like most people, you probably picture an old rich guy about to marry a not-so-rich young woman.

While that’s the traditional use for a prenuptial agreement, there are some personal-finance pundits who insist that virtually everyone considering marriage should have this type of agreement. Other experts disagree.

What’s a prenup?

A prenup is essentially the same thing as the property-settlement agreement associated with divorce. It’s a legal document detailing a couple’s assets and how they should be divided if the marriage ends.

In addition to keeping assets separate, a prenup can keep debts separate. It can also provide for spousal support and even dictate behavior during the marriage.

For example, the bride might say that if the husband gains too much weight, he forfeits money. Or the groom might stipulate that if the wife cheats, she loses. You’ll need a lawyer to do a proper prenup, and they’re not cheap: A typical prenup can start at $1,000, and averages more than twice that amount.

Does everyone really need one?

We often hear about the high rate of divorce in America, and that leads some experts to recommend prenups for everyone. But is the common belief that half of marriages end in divorce even true? Not according to some people. These experts suggest the rate is much lower, with some saying less than 30 percent of first marriages end up dissolving.

Women without undergraduate degrees have remained at about the same rate, their risk of divorce or separation within the first 10 years of marriage hovering at around 35 percent. But for college graduates, the divorce rate in the first 10 years of marriage has plummeted to just over 16 percent of those married between 1990 and 1994 from 27 percent of those married between 1975 and 1979.

Some experts suggest that agreeing to a prenup is actually a sign of great trust in a relationship. But sharing financial intimacies with your partner isn’t the same as sharing them with your partner, your lawyer, and your partner’s lawyer.

So, who does need a prenup?

As you’ve probably gathered by now, I think the suggestion that every engaged couple should have a prenup is silly. Two engaged people without any money starting their lives together shouldn’t create a $2,000 legal bill. And if they eventually split up, they should be OK with equally splitting what they made together.

But there are, in fact, a lot of people who should explore a prenup:

People with money, at least if they would like to leave the relationship with as much as they came in with. It doesn’t have to be big money: If I’m marrying someone with $100 million and I come in with $25,000, I still might want to protect my $25,000.

People who might inherit, at least if they want to make sure family property, heirlooms or money stay in the family.

People whose partners have debt, at least if they want to make sure their partner’s debt problems never become theirs.

People who own a business, at least if they want to make absolutely sure the business remains entirely theirs no matter what.

People whose income might radically increase, at least if they don’t want to potentially share it with anyone in the form of support after divorce.

People with children from other marriages, at least if they want to make sure certain assets pass to their kids — rather than to their partner — upon death.